Which of the following statements is TRUE of a decision tree?
A) The number at each endpoint of a decision tree represents the probability associated with a particular chain of events.
B) A decision tree cannot be used for complex business decisions.
C) In a decision tree, event nodes are represented by squares, while decision nodes are represented by circles.
D) Expected value calculations can be made directly on a decision tree to arrive at the best decision strategy.

Question

Quizplus · Accepted Answer

Expected value calculations can be made directly on a decision tree to arrive at the best decision strategy. This is because a decision tree allows for the calculation of the expected value of each decision path, taking into account the probabilities and payoffs associated with each decision. Option A is incorrect because the number at each endpoint of a decision tree represents the expected value, not the probability. Option B is incorrect because decision trees can be used for complex business decisions. Option C is incorrect because event nodes are represented by circles, while decision nodes are represented by squares.

Which of the Following Statements Is TRUE of a Decision